TOKYO (AP) - Japan's Cabinet approved a blueprint for reforms Friday meant to improve competitiveness and shore up long-term growth in the world's third-largest economy as its population ages and shrinks.
Prime Minister Shinzo Abe has outlined the reforms in whole and in part since taking office in December, calling them the "third arrow" in his economic recovery program.
"At last the time for action has come. Without action there can be no growth," Abe said in a video message released Friday after the Cabinet meeting.
Abe travels to Scotland this weekend for a meeting of the Group of Eight industrial countries, where he plans to explain his growth strategy to fellow leaders and perhaps seek to calm the wild gyrations that have rocked financial markets over the past few weeks.
Share prices soared beginning in late 2012 as the Japanese yen weakened in anticipation of aggressive monetary easing by the Abe-led government, raising corporate profits in yen terms and making Japan's exports relatively cheaper in overseas markets.
Recent declines have erased about half of those gains, shaking confidence in Abe's ability to deliver on a sustained economic recovery and on sweeping reforms intended to boost productivity and help Japanese companies compete against nimbler foreign rivals.
Few of the reforms endorsed Friday are new. Most were proposed by previous governments but were quashed by powerful vested interests or simply were left undone thanks to the chaos that has dominated Japanese politics for the past decade.
Most will be on hold until after an election for the upper house of parliament in July, when Abe's Liberal Democratic Party expects to win a mandate that would enable him to pursue a wider agenda that includes revising the constitution.
For now, he is refraining from tough decisions on such issues as tax cuts for businesses, sales tax hikes needed to help reduce Japan's huge public debt and dismantling protections for inefficient industries as part of market opening commitments under a regional trade arrangement called Trans-Pacific Partnership.
Abe has claimed early progress in countering the stagnation that has hobbled growth for more than 20 years through an onslaught of monetary and fiscal stimulus. But deeper, more far-reaching changes are needed to ensure the economy keeps growing.
Top priorities include tax incentives to encourage corporate investment: Japanese companies hold the cash equivalent of nearly six years-worth of capital investment but have been wary of upgrading capacity or adding new equipment.
Kazushi Nomura, whose Nambu Co. makes hydraulic cylinders used by automakers and steel mills in a fading Tokyo industrial district, says he hasn't bought new equipment in five years.
"The growth is all in overseas markets. The consumer base is shrinking here as society ages. Factories here are disappearing as they are replaced by apartment buildings," Nomura said.
Still, he said that with orders coming in, Abe's recovery strategy is proving to be "certainly better than that of the previous administration."
"We do have hope now. Before, we lacked any hope at all," he said.